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Jump In Coronavirus Cases May Lead To Profit Taking

The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to give back some ground after climbing to new record highs in the previous session.

Profit taking may contribute to early weakness on Wall Street, as traders cash in on recent gains amid news of a jump in new coronavirus cases.

Officials revealed an additional 242 deaths from the coronavirus in the Chinese province of Hubei as well as 14,840 new confirmed cases.

While the jump in confirmed cases was partly due to the adoption of new methodology for counting infections, the spike may still lead to renewed fears about the outbreak.

However, traders have recently been able to shrug off concerns about the coronavirus amid optimism that the outbreak will eventually be contained.

Any initial weakness on Wall Street may subsequently be seen as another buying opportunity even as a number of companies continue to warn about the impact of the outbreak.

Stocks showed a strong move to the upside during trading on Wednesday, adding to the modest gains posted on Tuesday. The upward move on the day lifted the major averages to new record closing highs.

The major averages reached new highs late in the session but gave back some ground going into the close. The Dow jumped 275.08 points or 0.9 percent to 29,551.42, the Nasdaq advanced 87.02 points or 0.9 percent to 9,725.96 and the S&P 500 climbed 21.70 points or 0.7 percent at 3,379.45.

The rally on Wall Street came as traders seem committed to continuing to push stocks to new record highs despite concerns about the economic impact of the coronavirus outbreak.

While China's National Health Commission reported 2,015 new confirmed coronavirus cases and 97 additional deaths, a recent slowdown in the rate of growth in new infections has led to optimism the outbreak is being contained.

With traders consistently shrugging off concerns about the outbreak and a lack of major U.S. economic news to drive the markets, the path of least resistance for stocks still seems to be the upside.

Traders also kept an eye on Federal Reserve Chairman Jerome Powell's testimony before the Senate Banking Committee.

Powell's prepared remarks mirrored those he delivered before the House Financial Services Committee on Tuesday.

In his prepared remarks, Powell said the Fed is closely monitoring the coronavirus outbreak but also highlighted the resilience of the U.S. economy.

Energy stocks fluctuated over the course of the session but closed significantly higher amid a sharp increase by the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 2.2 percent, the NYSE Arca Oil Index jumped by 1.7 percent and the NYSE Arca Natural Gas Index rose by 1.2 percent.

Substantial strength was also visible among computer hardware stocks, as reflected by the 1.9 percent gain posted by the NYSE Arca Computer Hardware Index.

Semiconductor, telecom and transportation stocks also saw notable strength, while tobacco and gold stocks bucked the uptrend.

Commodity, Currency Markets

Crude oil futures are edging down $0.10 to $51.07 a barrel after jumping $1.23 to $51.17 a barrel on Wednesday. Meanwhile, after rising $1.50 to $1,571.60 an ounce in the previous session, gold futures are climbing $5.80 to $1,577.40 an ounce.

On the currency front, the U.S. dollar is trading at 109.74 yen compared to the 110.09 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0856 compared to yesterday's $1.0874.

Asia

Asian stocks ended broadly lower on Thursday as the fight against the novel coronavirus in China took a turn for the worse after the adoption of new methodology for counting infections.

Chinese shares ended lower to snap a seven-day rally after some 242 deaths from the new coronavirus were recorded in the Chinese province of Hubei on Wednesday.

There was also a huge increase in the number of cases, with 14,840 people diagnosed with the virus - the bulk of it due to a reclassification.

The benchmark Shanghai Composite Index fell 20.83 points, or 0.7 percent, to 2,906.07, while Hong Kong's Hang Seng index shed 93.66 points, or 0.3 percent, to close at 27,730.

Japanese stocks gave up early gains to end lower after China's Hubei province reported a sharp increase in the number of new coronavirus cases. The Nikkei 225 Index slipped 33.48 points, or 0.1 percent, to 23,827.73, while the broader Topix closed 0.3 percent lower at 1,713.08.

Export-related stocks finished broadly lower as the safe-haven yen firmed against the dollar. Market heavyweight SoftBank fell 5 percent after surging almost 12 percent in the previous session in response to a U.S. federal judge's approval of a takeover of its Sprint unit by T-Mobile.

On the other hand, Taiko Pharmaceutical soared 6.8 percent after the drug maker raised its operating profit forecast for the year ending in March.

Semiconductor equipment maker Tokyo Electron climbed 2.1 percent to a record high after chip equipment maker Applied Materials forecast second-quarter revenue and profit above Wall Street estimates.

Australian markets pared gains to end off their day's highs as investors reacted to news of a big jump in coronavirus deaths and infections in China.

The benchmark S&P/ASX 200 Index edged up 15.00 points, or 0.2 percent, to 7,103.20, after powering to a record 7,145.80 in early trading. The boarder All Ordinaries Index inched up 19.30 points, or 0.3 percent, to 7,204.60.

Property group Goodman Group surged 5.8 percent after upgrading its earnings guidance. Utility AGL Energy rallied 3.6 percent after its half-year profit beat forecasts.

Caltex Australia climbed 2.4 percent after its Canadian suitor sweetened its takeover offer. National Australia Bank rose 1.4 percent after its unaudited cash earnings for the first quarter came in slightly higher than analysts' estimates.

Meanwhile, Treasury Wine Estates tumbled 5.7 percent after the release of its half-year results. AMP shed 0.6 percent after the financial services group posted a $2.5 billion loss and scrapped its final dividend.

Gold miner Newcrest Mining fell 1.7 percent after the company finished the previous half with a 12 percent reduction in gold output. Telecom company Telstra declined 1.6 percent after its first-half profit fell more than 7 percent on lower revenues.

Seoul stocks fell slightly after two days of gains. The benchmark Kospi ended down 5.42 points, or 0.2 percent, at 2,232.96, reversing early gains.

Europe

European shares have come under pressure on Thursday, with China-related resource and automobile companies falling sharply after some 242 deaths from the new coronavirus were recorded in the Chinese province of Hubei on Wednesday.

There was also a huge increase in the number of cases, with 14,840 people diagnosed with the virus - the bulk of it due to a reclassification.

While the U.K.'s FTSE 100 Index has plunged by 1.5 percent, the French CAC 40 Index is down by 0.7 percent and the German DAX Index is down by 0.4 percent.

Dutch Life Insurer Aegon NV has moved sharply lower on the day after reporting a decrease in second-half pre-tax earnings.

Nestlé shares have also fallen. The food giant said it expects growth to accelerate over the next two years towards its mid-single digit organic growth target, initially set for 2020.

Copper producer Aurubis AG has also slumped after reporting a drop in its fiscal first quarter operating profit.

On the other hand, specialty chemicals company Clariant has surged higher as it unveiled plans to cut up to 600 jobs.

Commerzbank shares have also jumped. The bank proposed further cost-cutting measures after posting a net loss for the final quarter of 2019.

French telecommunications operator Orange SA has also moved to the upside after reporting a rise in fiscal year 2019 profit.

U.S. Economic Reports

With higher prices for food and shelter offsetting a steep drop in gasoline prices, the Labor Department released a report on Thursday showing a modest increase in U.S. consumer prices in the month of January.

The Labor Department said its consumer price index inched up by 0.1 percent in January after rising by 0.2 percent in December. Economists had expected prices to increase by 0.2 percent.

Core consumer prices, which exclude food and energy prices, rose by 0.2 percent in January after ticking up by 0.1 percent in the previous month. The increase in core prices matched economist estimates.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits inched up by less than expected in the week ended February 8th.

The report said initial jobless claims crept up to 205,000, an increase of 2,000 from the previous week's revised level of 203,000.

Economists had expected jobless claims to rise to 210,000 from the 202,000 originally reported for the previous week.

At 12:45 pm ET, Dallas Federal Reserve President Robert Kaplan is due to speak at the Greater Dallas Asian American Chamber of Commerce Economic Development Forum in Dallas, Texas.

The Treasury Department is scheduled to announce the results of this month's auction of $19 billion worth of thirty-year bonds at 1 pm ET.

At 5:30 pm ET, New York Fed President John Williams is due to speak in a moderated discussion at the New York Bankers Association, in New York.

Stocks In Focus

Shares of NetApp (NTAP) are moving sharply lower in pre-market trading after the data storage company reported fiscal third quarter results that missed analyst estimates and announced the retirement of its CFO.

Electric car maker Tesla (TSLA) may also come under pressure after announcing it intends to offer approximately $2 billion of common stock in an underwritten registered public offering.

Shares of Cisco Systems (CSCO) are also likely to see initial weakness after the networking giant reported better than expected fiscal second quarter results but provided disappointing guidance.

On the other hand, shares of Applied Materials (AMAT) may open higher after the semiconductor equipment maker reported fiscal first quarter results that beat estimates on both the top and bottom lines.

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